New year, new hope

New year, new hope – and when it comes to London’s property market there remains much to be hopeful about despite enormous challenges, writes Graham Norwood.

The capital is not immune from wider international economic concerns yet despite this London’s long-term housing market performance has been startling.

Savills says the average house price across Greater London has risen 70 percent in the past decade – even taking account of the global downturn. PriceWaterhouse Coopers, the business consultancy, uses a different analysis but comes up with a 63 percent rise for the entire capital on average in 10 years – a remarkable record.

In the current economic headwinds, however, that cannot continue.

Savills predicts a small dip in Greater London prices in 2018 (albeit with prices picking up immediately afterwards), while some other agencies are more optimistic: Countrywide and Jackson-Stops, for example, both predict no change for Greater London in 2018 as the market awaits more clarity over the effects of leaving the EU.

For Prime Central London there is better news.

LonRes, the data service that works with many of the leading agencies in prime areas, says its survey of agents and how they see prices moving in the next 12 months is the most optimistic since mid-2015.

Strutt & Parker, although anticipating no growth in prime London in 2018, nonetheless predicts cumulative 23 percent price rises by late 2022, and Savills says it anticipates similarly strong five-year growth of 20.3 percent – assuming the capital retains its leading global city status for financial services post-Brexit.

The rental market looks stable for the next 12 months, too.

Agents report that ‘accidental landlords’ who feel the time is not yet right to sell their properties are continuing to put homes forward for letting, maintaining a good supply. Alongside, the feared sell-off of properties because of tax and duty changes hitting landlords has not happened.

So although 2018 looks set to be a quiet year for the capital’s housing markets, there are no predictions of significant price falls and widespread belief that this is going to be merely a ‘pause’ ahead of further growth.

Such optimism is not ill-placed, because demand for both sales and rentals remains strong – and is set to grow more according to another agency, JLL. In its forecast for 2018 it puts forward a simple truth.

“Less than half of the 40,000 to 50,000 homes needed each year have been built over the past 20 years. With London’s population set to grow by an average of 100,000 people a year, despite Brexit, supply problems look set to remain.”

In other words, people still want to live in London – and will need homes, too.

“The capital is not immune from wider international economic concerns yet despite this London’s long-term housing market performance has been startling”